The Market Monitor Minding the Nation's Business
By Riza Lozada
Taiwan’s biggest lender to small and medium enterprises (SMEs), First Commercial Bank had started local operations to become the first foreign bank to set up a Philippine branch under Republic Act (RA) 10641 or the Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines enacted in July 2014.
The resiliency of the Philippines economy and full liberalization of the domestic banking system for foreign investors make the country attractive not only to Asian but non-Asian stakeholders, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
Eight other foreign banks were authorized to operate in the country after the bank liberalization law.
Tetangco said the number of non-Asian banks that have indicated interest to operate in the country is “substantial” but he declined to elaborate.
He said these foreign financial institutions are looking at partnering with local players instead of opening a new branch.
He earlier said that six Asian banks have earlier expressed interest to operate in the country but have yet to formalize their intention.
As of the end of last year, the policy-making Monetary Board (MB) has authorized nine foreign financial institutions to operate in the country.
Aside from First Commercial Bank, the other foreign banks set to open branches in the country are Japan’s Sumitomo Mitsui Banking Corp., South Korea’s Shinhan Bank, Taiwan’s Cathay United Bank, Industrial Bank of Korea, Taiwan’s Yuanta Bank, Singapore’s United Overseas Bank Ltd., Seoul-based Woori Bank, and Taiwan’s Hua Nan Commercial Bank Ltd.
Tetangco said the presence of foreign banks in the country provides an advantage since it encourages greater competition and benefits the public as these provide better pricing of their products.
He said foreign banks also help the BSP in getting data on foreign investors.
“In fact, they conduct investors’ briefings and investment seminars dealing with conditions as well as opportunities, economic and financial opportunities in the Philippines,” he said.
Asked on how long these banks will realize their intents to open local branches, Tetangco said it will depend on these banks meeting documentary requirements, among others.
FCB, which was originally established in November 26, 1899 as Savings Bank of Taiwan, applied for local operations in February 2016, got the approval last June and started domestic operations last December.
Tetangco said banks that have greater focus on some sectors such as SMEs have greater chances of securing BSP approval.
He said FCB, which is Taiwan’s biggest SME lender, is an example.
”That’s a big plus for them because that is one of the priorities of the government. They should provide more funding to our SMEs and this is entirely consistent with our financial inclusion and inclusive growth objective,” he said.
Tetangco, however, said FCB needs to get regulatory approval on its financial technology system.